PbTe crystals have a soft transverse optical phonon mode in the terahertz frequency range, which is known to efficiently decay into heat-carrying acoustic phonons, resulting in anomalously low thermal conductivity. Here, we studied this phonon via polarization-dependent terahertz spectroscopy. We observed softening of this mode with decreasing temperature, indicative of incipient ferroelectricity, which we explain through a model including strong anharmonicity with a quartic displacement term. In magnetic fields up to 25 T, the phonon mode splits into two modes with opposite handedness, exhibiting circular dichroism. Their frequencies display Zeeman splitting together with an overall diamagnetic shift with increasing magnetic field. Using a group-theoretical approach, we demonstrate that these observations are the result of magnetic field-induced morphic changes in the crystal symmetries through the Lorentz force exerted on the lattice ions. Thus, our Letter reveals a novel process of controlling phonon properties in a soft ionic lattice by a strong magnetic field.